Making Tax Digital Extended
On Tuesday, the 21st of July, the government presented the next steps to develop the digital tax system (MTD). It is designed to boost national productivity and to make it easier for businesses and people to pay tax while reducing errors and fraud.
At present, businesses with a taxable turnover of more than £85,000 /above the VAT threshold of £85,000/ are covered by the system, which requires them to keep digital records and to provide VAT returns through software. Since it was introduced on 1st April 2019 more than 1.4 million businesses have joined the programme, submitting over 6 million returns. Over 30% of smaller VAT-registered businesses, who are not yet required to do so, have chosen to register voluntarily because of the wider benefits the digital tools offer, including better business overview, fewer errors and increased productivity.
From April 2022, the programme will be extended to all businesses with turnover below the VAT threshold (£85,000), and from April 2023 it will apply to taxpayers who file income tax self-assessment tax returns for business or property income over £10,000 annually.
The Treasury assures that Making Tax Digital changes will affect the way that taxes are reported, not the level of tax that is collected.